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(Last updated: 21 April 2007 )
Assignment for the last day of class and announcements for exam week.
On Monday, April 23, the last day of class, we will discuss new and emerging payment systems. For this discussion, you should read the final coursepack excerpt by Ronald Mann. This excerpt can be read as general background, but if you are pressed for time, you should at least read pp. 93-102 [up to the section entitled, "Ensuring Regulatory Compliance."
Also as announced, I will hold additional office hours on Monday the 23rd from 4-5:30 pm, and extended office hours from 3-5:30 on Tuesday the 24th and Thursday the 26th.
Please do take the time to go onto Lawnet and fill out the online evaluation form for this course. Your comments will be very helpful both to future students, and to me and the administration in making curricular decisions.
Assignment for the fourteenth week of class. I have not yet had the chance to review the quiz results fully, but will do so over the weekend and report back with your scores and relevant feedback. In the meantime, here are next week's reading assignments.
- On Monday, April 16, I will first lecture on leftover material on conversion, and then we will will finish discussing forged and fraudulent instruments, focusing on the problems of impostors, fictitious payees, and altered instruments. You should read up through pp. 884; we will explore the material on impostors and fictitious payees using some in-class hypotheticals, and the material on alteration using the problem on p. 879. The N-Z panel is on call.
- On Tuesday, April 17, we will discuss the bank-customer contract, focusing on the issues of stop orders and liability for wrongful dishonor. You should read pp. 885-915 in the casebook. With regard to stop orders, we will discuss focus on the problems at pp. 895-896; and with regard to wrongful dishonor, we will discuss the case of Loucks v. Albuquerque National Bank at p. 905. The A-G panel will be on call.
In considering Loucks, you should keep in mind the following basic principles of partnership law, some of which are mentioned in the court's opinion:
- A partnership is a separate legal entity, distinct from the individual partners who belong to it. [See the revised Uniform Partnership Act, §201(a).]
- Any property acquired by a partnership, through transfer or otherwise, is property of the partnership and not of the partners individually. RUPA §203.
- A partner has no interest in partnership property which can be transferred, either voluntarily or involuntarily; but a partner's share of the partnership profits and of the partner's right to receive distributions may be transferable. RUPA §§501, 502.
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- On Wednesday, April 18, we will discuss contractual and policy issues arising out of the bank-depositor relationship, which will also serve as an organizing introduction to the law of new payment systems, much of which is primarily regulated by contract law. For this discussion, you should read pp. 915-930 in the casebook; in class discussion we will focus on Perdue v .Crocker National Bank. If there is time, we will discuss some issues raised by recent innovations in electronic banking. The H-M panel is on call.
Assignment for the thirteenth week of class.
- On Monday, April 9, we will begin discussing the problem of liability on forged or fraudulent instruments. On fraud and forgery, you should read pp. 819-842, together with §§3-406, 4-406 and the definitions of "ordinary care" in 3-103(a)(7) and 4-103(a). In class discussion we will focus on the problems at pp. 834-835, and then on National Title Insurance v. First Union National Bank, p. 837. The A-G panel is on call.
- On Tuesday, April 10, we will continue discussing forged instruments, focusing on the issues of the payor bank's right to recover for mistaken payment, and on other parties' right to recover for conversion. You should read pp. 842-858, together with §§3-416(a), 3-417(a), 3-418, and 3-420. In class discussion, we will discuss the problems at pp.842 and 843 [in preparation for which, you will find it worthwhile to review §§3-201, 3-203, and 3-301.] Then I will lecture on the conversion materials, if there is time. The H-M panel is on call.
- On Wednesday, April 11, we will have our second hour exam, covering material from guaranties and leases through fraud and forgery on negotiable instruments. You should arrive promptly at 2:45 pm in order to leave sufficient time for administration of the exam.
As before, the exam will be supervised by a proctor supplied by Registration Services, who- will provide exam numbers, scantron sheets, and pencils. Please direct any further questions relating to the administration of the exam to the Office of Registration Services. I will answer substantive questions on the course material via e-mail up till noon on the 11th.
Assignment for the twelfth week of class.
- On Monday, April 2, we will discuss legal and practical issues arising out of the traditional check collection system. You should read pp. 708-735, much of which presents institutional background material that I will summarize in lecture. For discussion, you should focus on First National Bank in Harvey v Colonial Bank, p. 725. The A-G panel is on call.
- On Tuesday, April 3, we will discuss modern developments in check collection, including Federal statutes and regulations that partially pre-empt the traditional UCC rules. You should read pp. 735-757, and prepare to discuss the problems at p. 744, as well as the following problem (based on Oak Brook Bank, p. 736). The H-M panel is on call.
- Problem: Suppose a check kiter draws a check on Payor Bank [PB], and presents it for deposit at Depositary Bank [DB] on Monday. DB forwards it to PB on Tuesday, but PB holds check till 2:45 pm on Thursday, and then dispatches a courier who arrives at 2:55 pm, just before DB locks its doors. At no point did DB release any funds to the kiter. What result under Article 4 and Regulation CC? Would it make a difference if the courier hit a speed bump and arrived at 3:05?
- On Wednesday, April 4, we will discuss credit and debit cards. You should read pp. 757-778 in the casebook. In class discussion we will focus on the problems at pp. 762-764, along with some hypothetical variants that are intended to bring out the issues raised by the Minskoff and Izraelewitz cases. The N-Z panel is on call.
Assignment for the eleventh week of class.
- On Monday, March 26, we will continue our discussion of the holder in due course. We'll start by considering the problem at p. 628 from last week; please review any material necessary for you to analyze this problem. begin our discussion of payments systems. Then please read pp. 630-645 and 652-654. We will focus in discussion on the problems at p. 653-54. The A-G panel is on call.
- On Tuesday, March 27, we will begin discussing the rights and duties of parties to negotiable instruments, focusing on the basic duties of drawers, drawees, and indorsers. You should read pp. 666-689, and prepare to discuss the problems at pp. 667, 670-71, and 688-89. At this point, many statutory sections become relevant, so I recommend that, instead of trying to read the statutory sections cited in the text in full, you consult them as needed to answer the discussion problems. The H-M panel is on call.
- On Wednesday, March 28, after completing any leftover material, we will discuss third-party liability on negotiable instruments, and specifically the liability of accommodation parties and agents. You should read pp. 689-707, together with together with §§3-116, 3-419,and 3-605. Our discussion will focus on the problems at pp. 691 and 699 (the former problem is tricky and you may find it useful to diagram the relationship among primary and secondary obligors). The N-Z panel is on call.
Assignment for the tenth week of class.
- On Monday, March 19, we will begin our discussion of payments systems. You should read the excerpts from Gillette, Scott and Schwartz's Payment Systems and Credit Instruments at pp. 59-92 of the supplementary coursepack. This reading includes important introductory material, but much of it can be read as general background at this stage, and not for close detail. For class discussion, you should focus on Miller v. Race (p. 68) and, Nemser v. New York City Transit Authority (p. 83). The factual setting of Miller may seem somewhat obscure to you; the factual setting of Nemser should not. In considering Miller, accordingly, you may find it helpful to compare its business context to the fact pattern in O'Connor v. Clark, the case we studied on the first day of class. The A-G panel is on call.
- On Tuesday, March 20, after completing any leftover material, we will turn to the subject of negotiability. You should read pp. 586-608 in the casebook, together with UCC §§ 3-301, 3-306, 3-203, and 3-104. In class discussion we will focus on the problems at pp. 592, 595, and 597. The H-M panel is on call.
- On Wednesday, March 21, after completing any leftover material, we will take up the rights and powers of the holder in due course. You should read pp. 608-630, together with §§3-305, 3-302, and 3-103(a)(4). Our discussion will focus on the problems at pp. 628 and 630. The N-Z panel is on call.
Assignment for the ninth week of class.
- On Monday, March 5, after finishing leftover material on valuation of collateral, we will discuss the trustee's avoidance powers under §§544 and 548. On valuation of collateral, you should be sure to reread and be prepared to discuss Associates Commercial Corporation v. Rash. On avoidance powers, you should read pp. 468-470 together with BC §544; and pp. 496-503 together with §548. The A-G panel is on call.
Our discussion of avoidance powers will start with the following problem, which includes a review of some basic priority concepts from Article 9:
Debtor [D] borrowed $100,000 from Bank [B] on June 1, signing a security agreement and a financing statement that gave B a security interest in D's inventory and equipment. B did not file the financing statement until July 15, and in the meantime, on June 5, Debtor borrowed $20,000 from Finance Co. [F] on a unsecured basis. D then defaulted on both loans.
(a) If F subsequently reduces its debt to judgment and obtains a judicial lien on all of D's assets in aid of enforcement, who will have priority in the inventory and equipment? What result if F had obtained its lien on July 10? [See §9-317.]
(b) Suppose instead that a dispute over priority arose on July 1, before F obtained any lien and before B filed. What result? [See §§9-201 and 301.]
(c) Suppose that Debtor filed a bankruptcy petition on July 10, before either creditor had filed or secured a judgment lien. Can either B or F prevail against the assets, or can the trustee of D's estate [T] take the inventory and equipment for the benefit of the estate? [See BC §§ 544(a)(1) and 101(36); UCC §9-317.]
(d) Suppose that D filed its bankruptcy petition on July 17 and F obtained its lien on July 10.
- Can the trustee set aside F's lien under §544(a)?
- Can the trustee set aside B's security interest under §544(a)?
- Can the trustee set aside B's security interest under §544(b)? [Hint: see BC § 506.]
- On Tuesday, March 6, we will finish our discussion of fraudulent transfers under §548, focusing on the problems at p. 499, and then take up the regulation of preferential transfers under §547. You should read pp. 471-487, together with §547 [and paying special attention to subsections 547(b) and 547(c)]. In class discussion, we will focus on the problems at pp. 472, 476, and 480. The H-M panel is on call.
- On Wednesday, March 7, we will continue with the topic of preferences. You should read pp. 487-496; our class discussion will focus on the problem at p. 489, and on some in-class hypotheticals intended to explore the main provisions of subsection (c). The N-Z panel is on call.
Assignment for the eighth week of class. This week we will consider two commercial devices that can operate as substitutes for secured credit, but that also are often used in combination with it. Then, we will take up the more complicated issue of the effect of bankruptcy on secured transactions, which will take us into the following week.
The topic of bankruptcy justifies an entire course and we will only be discussing those issues that are most relevant from the standpoint of Article 9; however, a certain amount of general background is useful. Accordingly, the casebook assignment begins with a fairly dense discussion of how bankruptcy works. You should read this background material but should not concern yourself with mastering all the details. I will provide a more streamlined summary in class, and our discussion will focus on a few central issues.I have also received the numerical scores for last week's quiz, but I have not yet had the chance to look over the result and determine which topics generated the most confusion. Once I do that, I will mail you the scores by ID number, and post a brief feedback memo on this site. Please watch this space for more information.
- On Monday, February 26, we discuss guaranties and loan covenants. All the readings are in the coursepack. You should read the excerpt from my article as background, and then read Pentax v. Boyd and ESL v Bovee more carefully. We will use Pentax to discuss the basics of suretyship defenses, and ESL to discuss the relationship between guaranties and secured lending. In considering the duties of care imposed on creditors for the benefit of guarantors, you may also find it useful to consult §9-207, which provides analogous but not identical duties on possessory secured creditors for the benefit of debtors. The A-G panel is on call.
- On Tuesday, February 27, we we will discuss the relationship between security interests and leases. You should read pp. 297-324, and should read §1-201(37) with particular care. [The casebook authors refer in the text to revised 1-203, but there is no substantive difference betweeen this provision and current 1-201(37).] In class discussion, we will focus on the problem at p. 305, and if there is time, on the problems at p. 323-324. The H-M panel is on call.
- On Wednesday, February 28, we will discuss basic issues relating to bankruptcy, and then will turn to a discussion of the bankruptcy treatment of secured claims. You should read pp. 438-468, along with Bankruptcy Code §§362 and 506 [the latter of which you should read with special care.] In class discussion, we will focus on the problems at pp. 445-446, and on Associates Commercial Corporation v. Rash. The N-Z panel is on call.
Assignment for the seventh week of class. I have reorganized the syllabus for weeks 7 and 8 in order to provide a more sensible division of material. This week we will spend a bit more time than I anticipated on default and foreclosure, and then next week will take up guarantees and leasing transactions. Our discussion of letters of credit, which combine elements of security and payment devices, will be postponed to the last week of the course.
- On Monday, February 19, we will continue our discussion of default and enforcement of security interests. Please review pp. 224-243, together with §§9-601, 9-602, 9-603 and 1-208, all of which were assigned for last week; and then also read pp. 243-254. In class discussion we will focus on KMC v. Irving Trust and on the problem at p. 246. The H-M panel is on call.
- On Tuesday, February 20, we will complete our discussion of default and enforcement, and in the later part of class, I will answer any review questions you may have.
Note: there are many sections in part 6 of Article 9 and you will not be able to digest all of them at once. Fortunately, you do not have to so long as you get a good overall grasp of the general remedial scheme and the strategic possibilities that can arise under it. In this regard, you will find it most useful to look at 9-609, 9-610, and 9-611, together with 9-625, 9-626, and 9-627. You should also read pp. 254-283. Our class discussion will focus on the General Electric Capital Corporation case, together with the problem at the top of p. 283. The N-Z panel is on call.
- On Wednesday, February 21, we will have our first hour exam, covering material thru default and enforcement. You should arrive promptly at 2:45 pm in order to leave sufficient time for administration of the exam.
The exam will be supervised by a proctor supplied by Registration Services, who will provide exam numbers, scantron sheets, and pencils. Please direct any further questions relating to the administration of the exam to the Office of Registration Services. I will answer substantive questions on the course material via e-mail up till noon on the 21st.
Assignment for the sixth week of class. This week we will complete our discussion of accounts financing, and turn to the issue of when and how a secured party is entitled to enforce its interest in the collateral. Keep in mind that the first midterm quiz is coming up next Wednesday, February 21.
- On Monday, February 12, we will continue our discussion of accounts financing, focusing on issues relating to proceeds, and if we have time, on the rights and duties of the account debtor. You should review leftover material assigned for last Wednesday, and be prepared to discuss the problems on proceeds at pp. 163-164. For rights of the account debtor, you should read the coursepack case of Artoc Bank & Trust v. Apex Oil, together with §9-404. The H-M panel is on call.
- On Tuesday, February 13, we will discuss security interests in chattel paper, instruments, and deposit accounts. You should read pp. 168-189 and 196-205 [omitting the HCC Credit Corporation case] and study 9-330 and 9-331. In class discussion, we will focus on the review problems at pp. 178-179. The N-Z panel is on call.
- On Wednesday, February 14, after finishing leftover material, we will take up issues relating to debtor default and creditor foreclosure. You should start by reading the coursepack excerpt from Robert Scott's " Rethinking the Regulation of Coercive Creditor Remedies", which provides important conceptual background for our discussion. Then please read pp. 224-243, together with §§9-601, 9-602, 9-603 and 1-208.. In class discussion we will focus on KMC v. Irving Trust and, if there is time, on Moe v. John Deere. The A-G panel is on call.
Assignment for the fifth week of class. As I indicated in class,we are now running one day behind relative to the schedule listed on the course syllabus. There is extra room built into the original schedule, however, so this should not pose a problem for our coverage of the material.
- On Monday, February 5, we will cover the material originally assigned for last Wednesday: pp. 119-135 in the casebook together with §§9-103 and 9-324. In class discussion, we will focus on the problems at pp. 124. The H-M panel is on call.
- On Tuesday, February 6, take up the issues raised by priority conflicts between secured parties and persons who buy or lease from the debtor. You should read pp. 137-148, and study §§9-315(a) and 9-320. In class discussion, we will focus on the problems at pp. 138-140. The N-Z panel is on call.
- On Wednesday, February 7, we will begin discussing accounts financing. You should read pp. 148-168, together with §§9-109 and 9-315 . In class discussion, we will focus on In re Wiersma and on the problems at pp. 163-164. The A-G panel is on call.
Assignment for the fourth week of class. As indicated in class, I have adjusted the composition of the three discussion panels to bring them into roughly equal size. The Monday panel now consists of students with last names beginning with letters between H-M [Hawa to Melrose]. ]The Tuesday panel consists of students with last names beginning with letters between N-Z [Nawyn to Zhu]. And the Wednesday panel consists of students with last names beginning with letters between A-G [Abbott to Gungoll.]
- On Monday, January 29, we will complete our discussion of the Article 9 filing system, and then turn to a discussion of other methods of perfecting security interests. You should review the leftover material from last week, including the problems at pp. 73 and 81, and then read pp. 82-92, together with §§ 9-309, 9-312(a) and (b), and 9-313. We will focus in discussion on In re Rolain, and if there is time, on the problems at p. 92.
- On Tuesday, January 30, after completing any leftover material, we will begin discussing the various priority rules of Article 9. You should read pp. 108-118 and 135-137, as well as §§9-317(a) and 9-322. In class discussion we will focus on the problems at pp. 110, 111, and 136.
- On Wednesday, January 31, after completing leftover material, we will take up the topic of purchase money priority -- that is, the priority enjoyed by a lender who finances the acquisition of new assets. The Scott [5] excerpt in the coursepack is useful background on policy and planning issues; for statutory details you should read pp. 119-135, the definition of "purchase money" in §9-103, and the priority rules found in §9-324. In class discussion we will focus on the problems at pp. 124.
Assignment for the third week of class. Based on final class enrollment, I have divided the class into three panels, each of which will be primarily responsible for class participation on any given day. You may trade slots, either permanently or on a one-time basis, so long as you let me know of the trade via e-mail. Similarly, if you cannot attend or prepare for class on the day your panel is on call, please arrange with a fellow student from another panel to trade with you, and have your substitute contact me before class.
The Monday panel consists of students with last names beginning with letters between G-M [Gerber to Melrose]. ]The Tuesday panel consists of students with last names beginning with letters between N-Z [Nawyn to Zhu]. And the Wednesday panel consists of students with last names beginning with letters between A-F [Abbott to Ferguson.]
- On Monday, January 22, we will discuss attachment — Article 9's term of art for the creation of a valid security interest. You should read pp. 17-49 and §9-203 (including the official comments). Our discussion will focus on the Bollinger and Filtercorp cases. The Grabowski and Swets Motor Sales cases will not be taken up in class, but you are responsible for the material contained in them. In particular, Swets Motor Sales provides a useful review of the material from the first two weeks of class.
- On Tuesday, January 23, we will begin discussing perfection — Article 9's term of art for the enforceability of a security interest against most third parties. You should read pp. 50-71 in the casebook, together with §§9-308(a), 9-310(a), 9-502(a), and 9-516. The first two provisions are fairly straightforward reading; the last two are complicated and will require closer attention, both to the text, and to the relevant official comments. In class discussion we will focus on the problems at p. 52 and p. 54, and cases (1) through (3) at p. 68.
- On Wednesday, January 24, we will we will continue our discussion of the article 9 filing system. You should read pp. 71-82 in the casebook, together with sections 9-507 and 9-508. We will focus in discussion on the problems at pp. 73 and 81, augmented by some in-class hypotheticals.
Assignment for the second week of class. Our schedule is unusual this week in two respects. First, there is no class meeting on Monday due to the university holiday in honor of Dr. Martin Luther King, Jr. Second, the Tuesday class will be rescheduled to Friday at 1:30 pm for this week only, in our usual room.
- On Wednesday, January 17, we will complete our discussion of Alamo v Mendenhall; as I indicated in class, you should consider whether the Mendenhalls have a plausible estoppel argument under §1-103. Then, we will begin our discussion of secured transactions under UCC Article 9. You should read pp. 1-16 in the Jordan, Warren and Walt casebook, together with § 9-201. In class discussion we will focus on the case of Knox v. Phoenix Leasing. Note that this case contains many citations to the previous version of Article 9, but at this point you do not need to concern yourself with them.
Here are some questions that you should consider as you study the Knox case: [1] What are the essential business purposes of the underlying transaction? [2] How does 2-403 apply to the case? [3] Does the outcome make sense, either in functional terms or in terms of fairness?
- On Friday, January 19, we will discuss basic principles of transactional planning in secured credit contracts. You should read the coursepack excerpts by Honnold et al. [3] and Schwartz/Scott [4]. Don't worry about understanding all the complexities of the transactions that Honnold describes; they are provided to give you a sense of the scope of the material we are covering.) We will devote class discussion to a series of hypotheticals intended to explore the ideas in the Schwartz/Scott excerpt.
Assignment for the first week of class. The required texts are Warren and Walt, Commercial Law, 6th ed. (Foundation Press: 2004), and Baird, Eisenberg and Jackson's Commercial And Debtor-Creditor Law: Selected Statutes, 2006 ed. (West Group). There is also a short supplementary coursepack, available for purchase in hard copy from University Printing Services, Room 401 International Affairs, and also available online for registered and waitlisted students.
- For the first class meeting on Monday, January 8, please read and be prepared to discuss the first case in the coursepack, O’Connor v. Clark.
- For Tuesday, January 9, please study carefully the text of UCC §2-403(1) together with associated comments 1 and 2. Please also read and be prepared to discuss the second coursepack case, Alamo Rent-A-Car v. Mendenhall.
- For Wednesday, January 10, please study carefully the remaining text of UCC §2-403 [subsections (2), (3) and (4)] together with associated comments 3 and 4. Please also be prepared to discuss how these additional statutory materials apply to Alamo Rent-A-Car.